Thursday, February 16, 2017

Political Consensus Is Splintering into Class Wars

Understanding how these many wars will be waged is critical to surviving them intact.

In years past, we spoke of class war between the haves and the have-nots. It's no longer that simple. Now the traditional political consensus is splintering into multiple class wars between overlapping camps of the protected and the unprotected, those who've been promised entitlements and privileges that are no longer affordable and those expected to pay more taxes.

In the modern era, the phrase Class War is rooted in the
socialist/Marxist concept that the conflict between labor (the working
class) and capital (owners of capital) is not just inevitable—it’s the
fulcrum of history. In this view, this Class War is the inevitable
result of the asymmetry between the elite who own/control the capital
and the much larger class of people whose livelihood is earned solely by
their labor.

In Marx’s analysis, the inner dynamics of capitalism inevitably lead to
the concentration of capital in monopolies/cartels whose great wealth
enables them to influence the government to serve the interests of
capital. Subservient to capital, the laboring class must overthrow this
unholy partnership of capital and the state to become politically free
via ownership of the means of production, i.e. productive assets.

This Class War did not unfold as Marx anticipated. The laboring
class gained sufficient political power in the early 20th century to win
the fundamentals of economic security: universal public education,
labor laws that prohibited outright exploitation, the right to unionize,
and publicly funded pensions.

(The alternative explanation for this wave of progressive policies is
that prescient leaders of the capital/state class ushered in these
reforms as the only alternative to the dissolution of the status quo.
Labor reforms began in Germany and Great Britain in the late 19th
century Gilded Age, and another wave of reforms were enacted in the
decade-long crisis of capitalism in the Great Depression.)

Though the conventional view is that this failure of capitalism to
devolve as expected proves Marx’s analysis is without merit, it can also
be argued that the state-capital partnership was far more flexible than
early Marxists anticipated: sharing enough of the wealth generated in
the industrial revolution with the laboring class to enable a stable,
productive middle class benefited the state-capital class by creating a
new strata of consumers (of goods, services and credit) who greatly
enriched industrial and financial capitalists and the state, which could
raise unprecedented sums in payroll and income taxes.

Basking in the luxury of hindsight, it’s easy for us in the present day
to forget the often-violent struggles between labor and capital that
characterized the early 20th century: anarchists bombed Wall Street, and
the Powers That Be sent in armed forces to suppress efforts to unionize
entire swaths of industrial workers.

While the middle class of professionals, small business owners, traders
and entrepreneurs can be traced back to the birth of modern capitalism
in the 15th century, the emergence of a mass middle class of tens of
millions of wage-earners with the purchasing and borrowing power created
by stable employment was a unique feature of 20th century capitalism.

In effect, the middle class was the Grand Truce in the class war: the
state’s imposition of regulations and a social safety net on unfettered
capital resolved labor and capital’s primary conflict by sharing the
output of capitalism’s bounty.

Many assets had to be put in place to enable this vast distribution of
wealth to tens of millions of laborers: a cheap, abundant source of
energy (fossil fuels—coal, oil and natural gas), an efficient,
accessible transportation network, a financial system that could extend
credit to millions of households, and a government with the tax revenues
and resources to fund public works that were too risky or out of reach
for private-sector capital.

In the latter third of the 20th century, the permanence of this version
of state-capitalism was unquestioned: laborers would always be able to
enter the middle class, and opportunities for advancement would always
be open to those with middle class access to education and credit.

There was no compelling reason to believe this consensus was about to
fray and potentially dissolve, and no reason to think that rather than
being a permanent feature of advanced capitalism, the middle class was a
one-off based on cheap energy, surging productivity and the boost-phase
of credit expansion.

But now income and wealth inequality are rising sharply, and capital is
pulling far ahead of labor, which is creating a vast and
quickly-widening divide between the classes.

Class Warfare: It’s More Than Just Income

Fast-forward to today, and an unexpected series of class wars are
emerging as this longstanding social contract frays: social mobility has
declined, fostering a divide between the traditional working class
(also known as the lower-middle class) which finds itself increasingly
exposed to the corrosive winds of globalization and neoliberal policies,
and the upper-middle class of highly educated professionals and
technocrats who have benefited from these policies, securing protected
employment in higher education, government and Corporate America.

described
America’s nascent class war as pitting the protected class—those with
secure pay and benefits —against the unprotected class of those with
insecure employment and benefits.

In other words, the divisive economic issue is not simply the quantity
of each class’s income and wealth, but the quality of their respective
economic security.

For example, if an unprotected household earns $80,000 in wages and
$30,000 in benefits in a good year of full employment in benefits-rich
jobs, and $30,000 in wages and no benefits in the following not-so-good
year of zero-benefits part-time work, their average total earnings are
$70,000 per year—a very respectable middle class income.

But compare the difficulties posed by losing healthcare benefits and
getting by on a $50,000 decline in wages vs the secure $70,000 earned
year-after-year-after-year by a protected household.

Consider the anxieties burdening the insecure household of two workers
who cannot count on having benefits and full-time employment, who see
their savings or retirement accounts built up in good years drained in
bad years. Houses bought in good years are forced into foreclosure in
bad years.

To take another example: compare the security of a tenured professor in
higher education with the insecure zero-benefits earnings of a lecturer
whose annual teaching contract is subject to cancelation or modification
every year of his/her career.

Not only is the lecturer paid about half the salary of the tenured
professor, when the lecturer nears retirement age, he/she has no pension
other than Social Security, while the tenured professor has an ample
retirement package of pension and healthcare coverage. Both taught the
same number of years, but one faces a sunset of poverty or the need to
keep working far past the conventional retirement age of 65, while the
other can retire comfortably and continue teaching or doing research for
satisfaction rather than financial necessity.

The underlying problem is the number of tenured positions is far smaller than the number of qualified candidates. The overproduction of highly educated workers is dividing the middle class into haves and have-nots along new fault lines.

Class Warfare: Economic and Cultural

This widening gap between the Protected and the Unprotected is not just economic; it's also cultural.

The Mobile Cosmopolitans who secure protected positions have little
exposure to the challenges of the unprotected, whom they typically
interact with only as an employer giving instructions to maids, nannies,
dog-walkers, waiters, etc. Sociologist Charles Murray described this
widening cultural gap in his 2012 book Coming Apart: The State of White America, 1960–2010.

Murray posited that various behaviors and associations characterize each
class. The working class, for example, volunteers to serve in the U.S.
military, while the elites are in civilian positions of power (for
example, those who order the working-class volunteers into America’s
permanent wars.) The working class attend NASCAR races, the elite class
pursues cultural enrichment, and so on.

While many commentators view Murray’s conclusions as overly negative,
the recent presidential election has heightened the cultural divide he
described between Hillary Clinton’s "deplorables" (who President Obama
chided for their attachment to "guns and Jesus") and the self-described
(and oh so morally superior) "progressives."

(The word is in parentheses because I have suggested that these
self-anointed "betters" are at best fake-progressives, as they support
exploitive neoliberal policies that are anything but progressive.)

It’s painfully obvious that the economic division between protected and
unprotected overlays all too well on Murray’s cultural divisions.

The upper-middle "progressive" class has the sort of social/financial
mobility and security—both higher quantities of income and wealth and
higher qualities of security--that are out of reach of most of the
country's much larger number of unprotected households.

All the advantages that accrue to the upper-middle class—social
mobility, access to higher education minus the crushing burdens of
student loan debt, family and social connections that lead to lucrative
careers, parents who can afford to give their offspring cars and down
payments for homes—are accretive: each reinforces the others.

The intensity of life’s challenges is considerably different for each class. With
higher income and greater security (such as having stable healthcare
insurance), the protected class can afford to take better care of
themselves; they have multiple layers of financial cushions against
life’s inevitable difficulties such as layoffs, illnesses that require
sick leave/costly procedures, auto accidents, etc.

For the protected elites, the intensity of these challenges is lessened
by financial and social resources. Social connections lead to new
employment in the same profession, gold-plated healthcare insurance
covers most of the costs of illness, and ample auto insurance replaces
the wrecked vehicle with minimum disruption.

Meanwhile, to the unprotected household, each of these difficulties is
potentially devastating: a secure job may never be replaced, an illness
may lead to bankruptcy, and the loss of a reliable vehicle may cripple
the household’s ability to get to work and earn the money needed to buy
another car.

The social contract of the 20th century established state-funded safety
nets for those who experience layoffs and medical emergencies. But these
programs were by and large designed to provide temporary aid to those
who were “getting back on their feet.”

As the foundations of middle class mobility and security erode, these
programs are now morphing into permanent, lifelong welfare systems. This
is creating new social stresses and divisions.

The Pitchforks Are Being Sharpened

But this protected vs. unprotected isn't the only Class War that’s
brewing. Many of the protected feel their security is increasingly
vulnerable, and others are tired of being tax donkeys. Everyone
feels defensive and entitled to their current slice of the pie. As the
pie shrinks, few will relinquish their claims voluntarily.

The net result: a shattering of political consensus into warring camps.

we
show why the shrinking resource pie—of cheap energy, of cheap debt, of
labors’ share of the economy, of the low-hanging fruit of
globalization—will soon cleave any mass movement into competing classes.

Our complex, interdependent civil society will spawn equally complex and
interdependent class conflicts as a result. In short: there won’t be
one class war, there will be many, raging across social, political and
economic battlefields.

Understanding how these many wars will be waged is critical to surviving them intact.

This essay was first published on peakprosperity.com, where I am a contributing writer, under the title "The Coming Class War"